Alcoa Corporation Investor Presentation May 2018 Important - - PowerPoint PPT Presentation

Alcoa Corporation

Investor Presentation

May 2018

This presentation contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “goal,” “intends,” “may,” “outlook,” “plans,” “projects,” “seeks,” “sees,” “should,” “targets,” “will,” “would,” or other words of similar meaning. All statements by Alcoa Corporation that reflect expectations, assumptions or projections about the future, other than statements of historical fact, are forward-looking statements, including, without limitation, forecasts concerning global demand growth for bauxite, alumina, and aluminum, and supply/demand balances; statements, projections or forecasts of future or targeted financial results or operating performance; and statements about strategies, outlook, and business and financial prospects. These statements reflect beliefs and assumptions that are based on Alcoa Corporation’s perception of historical trends, current conditions, and expected future developments, as well as other factors that management believes are appropriate in the circumstances. Forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and changes in circumstances that are difficult to predict. Although Alcoa Corporation believes that the expectations reflected in any forward-looking statements are based on reasonable assumptions, it can give no assurance that these expectations will be attained and it is possible that actual results may differ materially from those indicated by these forward-looking statements due to a variety of risks and uncertainties. Such risks and uncertainties include, but are not limited to: (a) material adverse changes in aluminum industry conditions, including global supply and demand conditions and fluctuations in London Metal Exchange-based prices and premiums, as applicable, for primary aluminum, alumina, and other products, and fluctuations in indexed-based and spot prices for alumina; (b) deterioration in global economic and financial market conditions generally; (c) unfavorable changes in the markets served by Alcoa Corporation; (d) the impact of changes in foreign currency exchange rates on costs and results; (e) increases in energy costs; (f) declines in the discount rates used to measure pension liabilities or lower-than-expected investment returns on pension assets, or unfavorable changes in laws or regulations that govern pension plan funding; (g) the inability to achieve the level of revenue growth, cash generation, cost savings, improvement in profitability and margins, fiscal discipline, or strengthening of competitiveness and operations anticipated from restructuring programs and productivity improvement, cash sustainability, technology advancements, and other initiatives; (h) the inability to realize expected benefits, in each case as planned and by targeted completion dates, from acquisitions, divestitures, facility closures, curtailments, restarts, expansions, or joint ventures; (i) political, economic, trade, and regulatory risks in the countries in which Alcoa Corporation operates or sells products; (j) the outcome of contingencies, including legal proceedings, government or regulatory investigations, and environmental remediation; (k) the impact of cyberattacks and potential information technology or data security breaches; and (l) the other risk factors discussed in Item 1A of Alcoa Corporation’s Form 10-K for the fiscal year ended December 31, 2017 and other reports filed by Alcoa Corporation with the U.S. Securities and Exchange Commission (SEC). Alcoa Corporation disclaims any obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law. Market projections are subject to the risks discussed above and other risks in the market. Any information contained in the following slides that has been previously publicly presented by Alcoa speaks as of the date that it was originally presented, as indicated. Alcoa is not updating or affirming any of such information as of today’s date. The provision of this information shall not imply that the information has not changed since it was

• riginally presented.

Cautionary statement regarding forward-looking statements

Important information

2

Some of the information included in this presentation is derived from Alcoa’s consolidated financial information but is not presented in Alcoa’s financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). Certain of these data are considered “non-GAAP financial measures” under SEC rules. Alcoa Corporation believes that the presentation of non-GAAP financial measures is useful to investors because such measures provide both additional information about the operating performance of Alcoa Corporation and insight on the ability of Alcoa Corporation to meet its financial obligations by adjusting the most directly comparable GAAP financial measure for the impact of, among others, “special items” as defined by the Company, non-cash items in nature, and/or nonoperating expense or income items. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. Reconciliations to the most directly comparable GAAP financial measures and management’s rationale for the use of the non-GAAP financial measures can be found in the appendix to this presentation. This presentation includes a range of forecasted 2018 Adjusted EBITDA for the Company. Alcoa Corporation has not provided a reconciliation of this forward-looking non- GAAP financial measure to the most directly comparable GAAP financial measure for the following reasons. The Company’s financial results are heavily dependent on market-driven factors, such as LME-based prices for aluminum, index- and spot-based prices for alumina, and foreign currency exchange rates. As such, the Company may experience significant volatility on a daily basis related to its forecasted Adjusted EBITDA. Management applies estimated sensitivities, such as relating to aluminum and alumina prices and foreign currency exchange rates, to the components that comprise Adjusted EBITDA. However, a similar analysis cannot be performed relating to the components necessary to reconcile Adjusted EBITDA to the most directly comparable GAAP financial measure without unreasonable effort due to the additional variability and complexity associated with forecasting such items. Consequently, management believes such reconciliation would imply a degree of precision that would be confusing and/or potentially misleading to investors.

Non-GAAP financial measures

Important information (continued)

3 On January 1, 2018, Alcoa Corporation adopted guidance issued by the Financial Accounting Standards Board to the presentation of net periodic benefit cost related to pension and other postretirement benefit plans. This guidance requires the non-service cost components of net periodic benefit cost to be reported separately from the service cost component in an entity’s income statement. Additionally, this guidance is required to be applied retrospectively. Accordingly, previously reported amounts for Cost of goods sold, Selling, general administrative, and other expenses, and Other expenses (income), net on Alcoa Corporation’s consolidated income statement have been recast to reflect these changes. As a result, previously reported amounts for Adjusted EBITDA on both a consolidated basis and for each of the Company’s three segments have been updated to reflect these changes. See the appendix for additional information.

Financial presentation information

A glossary of abbreviations and defined terms used throughout this presentation can be found in the appendix.

Glossary of terms

Company overview Strategic priorities

Strong start as new independent company

Keys to Alcoa

4

World-class governance with management incentives aligned to stockholder’s interests Disciplined capital allocation framework; actions and investments aligned to support future growth Global network of world-class assets; well-positioned across market events

2017 Cost curve and business position

World class, low cost assets

▪ World’s second largest bauxite miner, with a first quartile cost position ▪ Long-lived assets with low-cost growth opportunities

5

▪ Largest alumina refiner and largest long position, outside of China ▪ Low cost, global network of refineries with a collective mid-first quartile cost position

Source for 2017 cost curve and business position: CRU and Alcoa analysis.

▪ Top 10 global aluminum smelter with mid-second quartile cost position ▪ Segment includes Warrick rolling mill and Brazilian energy assets

Alumina Aluminum Bauxite

1st Quartile 2nd Quartile 1st Quartile

Bauxite segment information 2017 Production by country, Mdmt

Large, globally diverse bauxite portfolio

Key considerations

6

▪ Globally diverse, large, low-cost bauxite portfolio, advantaged in a high caustic price environment ▪ Strategically located in proximity to major Atlantic and Pacific markets ▪ Operational control of four mines (two in Australia and two in Brazil) ▪ Ownership interest in three additional mines (Brazil, Guinea and Saudi Arabia) ▪ Outside of the AWAC JV, Alcoa owned approximately 1.5 Mdmt of production in Brazil in 2017

Brazil: 8.5 Guinea: 3.2 Saudi Arabia: 0.9 Australia: 33.2

Alumina segment information Alcoa consolidated operating capacity, kmt

Premier alumina refining portfolio

Key considerations

7

▪ World’s largest, low-cost third-party alumina business ▪ Highly efficient consumer of caustic soda ▪ Mid-first quartile cost curve position allows for cash flow generation through all points in the commodity cycle ▪ ~95% of 3rd party smelter-grade alumina shipments priced on API/spot ▪ Annualized EBITDA sensitivity: $80M for +$10/mt API (consolidated basis) ▪ 2,519 kmt of curtailed refining capacity globally

1. The Company’s proportionate share of earnings from its equity investment in the Saudi Arabian joint venture does not impact adjusted EBITDA.

Facility Country Current Operating Capacity Ownership Consideration Kwinana Australia 2,190 AWAC Pinjarra Australia 4,234 AWAC Wagerup Australia 2,555 AWAC Poços de Caldas Brazil 176 Alcoa São Luís Brazil 1,890 72% AWAC 28% Alcoa San Ciprián Spain 1,500 AWAC Point Comfort U.S.

• AWAC

Total 12,545 Ras Al Khair1 Saudi Arabia 452 AWAC

Aluminum segment information Integrated aluminum value chain

Transformed and integrated aluminum business

▪ Segment includes aluminum smelting, casting, and rolling operations, along with

• wnership interests in several hydroelectric

energy assets in Brazil Key considerations

8

▪ Transformed the smelting portfolio by divesting, closing or curtailing uneconomic assets to move into the mid-2nd quartile on the global cost curve ▪ ~70% of electricity consumed by our smelters is generated by hydroelectric power ▪ Operating 2,148 kmt of smelting capacity with optionality to restart ~900 kmt of curtailed capacity ▪ Restarting 161 kmt of smelting capacity at

• ur Warrick facility to reduce complexity and

improve overall profitability of the complex ▪ Brazilian hydroelectric assets generated over $90 million in adjusted EBITDA in 2017

▪ Well-balanced global portfolio with long positions across all three segments ▪ Globally diverse bauxite portfolio; advantaged in a high caustic price environment ▪ Alumina refineries with large strategic positions in both the Atlantic and Pacific markets ▪ Cost competitive, global network of smelters with optionality to restart capacity in each region

2017 Bauxite production, and refining and smelting capacity, kmt

Alcoa uniquely positioned across products, geographies

9 1. Includes Alcoa’s equity share of alumina refining and aluminum smelting capacity for our Saudi Arabian joint venture.

4,100 1,952 1,164 56 4,100 Bauxite 1,220 Aluminum Alumina 1,952 167 8,979 30 Alumina 33,200 33,200 Bauxite Aluminum 8,979 197 1,003 709 2,305 Bauxite Alumina Aluminum 2,305 1,712 8,500 2,066 214 Alumina Aluminum Bauxite 8,500 2,280 268 Curtailed Operating

North America South America Europe, Middle East1 & Africa Australia

Capital allocation strategy 2018 Framework

Balanced capital allocation approach for 2018

Disciplined approach for 2018

10

▪ Target holding $1 billion in cash on hand ▪ Maintain the assets by spending close to $300 million in sustaining capital expenditures ▪ Invest approximately $150 million in return-seeking capital projects ▪ Provide additional funding of approximately $300 million into pension plans in 2018 ▪ Split excess cash above $1 billion balance, 50% to reduce leverage and 50% returns to stockholders

Maintain liquidity

Greater than $1B cash balance

Sustain the

• perations

~$300M in sustaining capital expenditures

Drive value creation

~$150M in return-seeking capital expenditures

Optimize liabilities

~$300M plus 50% excess cash above $1B

Return cash to stockholders

50% excess cash above $1B

Important governance factors

World-class governance profile

11 1. Stockholders owning 25% for at least one year.

Independent non-executive chairman

✓

Annually elected directors

✓

Independent Board committees

✓

Majority vote standard in uncontested elections

✓

Director retirement and resignation policies

✓

Proxy access

✓

High “say-on-pay” approval

✓

Stock ownership guidelines for executives and directors

✓

Stockholder ability to call special meetings1

✓

Executive compensation overview Example policies and practices

Management incentives aligned to stockholder’s interests

▪ What we do: ▪ Pay for performance ▪ Maintain robust stock ownership guidelines ▪ Schedule equity award grants to promote transparency and consistency ▪ Clawback policies incorporated into plans ▪ What we don’t do: ▪ No employment contracts ▪ No dividend equivalents on stock options and unvested restricted share units ▪ No discounting of stock options or repricing

• f underwater stock options (including

cash-outs) Components of compensation program

12

▪ Three primary components – base salary, annual incentive compensation and long- term incentive awards ▪ Mix of long-term incentive awards for named executive officers ▪ Long-term performance-based equity awards are tied to return on capital improvement and relative total stockholder return compared to the S&P 500

60% 20% 20%

Time-vested stock options Performance-based restricted share units Time-based restricted share units

Company overview Strategic priorities

Strong start as new independent company

Keys to Alcoa

13

World-class governance with management incentives aligned to stockholder’s interests Disciplined capital allocation framework; actions and investments aligned to support future growth Global network of world-class assets; well-positioned across market events

1Q18 Financial Results and Other Information as presented on April 18, 2018

M, Except realized prices and per share amounts 1Q17 4Q17 1Q18 Prior Year Change Sequential Change Realized primary aluminum price ($/mt) $2,080 $2,365 $2,483 $403 $118 Realized alumina price ($/mt) $325 $406 $385 $60 $(21) Revenue $2,655 $3,174 $3,090 $435 $(84) Cost of goods sold $2,023 $2,339 $2,381 $358 $42 SG&A and R&D expenses $78 $78 $75 $(3) $(3) Adjusted EBITDA $554 $757 $634 $80 $(123) Depreciation, depletion and amortization $179 $187 $194 $15 $7 Other expenses / (income), net $(79) $30 $21 $100 $(9) Interest expense $26 $27 $26 $- $(1) Restructuring and other charges $10 $297 $(19) $(29) $(316) Tax provision $110 $272 $138 $28 $(134) Net income (loss) $308 $(56) $274 $(34) $330 Less: Net income attributable to noncontrolling interest $83 $140 $124 $41 $(16) Net income (loss) attributable to Alcoa Corporation $225 $(196) $150 $(75) $346 Diluted earnings (loss) per share $1.21 $(1.06) $0.80 $(0.41) $1.86 Diluted shares outstanding 186.3 185.1 188.5 2.2 3.4

Quarterly income statement

1Q18 Income statement

15

M, Except per share amounts 1Q17 4Q17 1Q18 Description of significant 1Q18 special items Net income (loss) attributable to Alcoa Corporation $225 $(196) $150 Diluted earnings (loss) per share $1.21 $(1.06) $0.80 Special items $(108) $391 $(5) Cost of goods sold

• $39

$19 Warrick smelter restart costs Selling, general administrative and other

• Restructuring and other charges

$10 $297 $(19) Pension and OPEB actions in U.S. and Canada Interest expense

• Other expenses / (income), net

$(124) $(1) $(17) Mark-to-market energy contracts Tax provision $3 $68 $12 Taxes on special items Noncontrolling interest $3 $(12)

• Adjusted net income attributable to Alcoa Corporation

$117 $195 $145 Adjusted diluted earnings per share $0.63 $1.04 $0.77

Breakdown of special items by income statement classification – gross basis

Special items total $(5) million

16

M, Except realized prices and per share amounts 1Q17 4Q17 1Q18 Prior Year Change Sequential Change Realized primary aluminum price ($/mt) $2,080 $2,365 $2,483 $403 $118 Realized alumina price ($/mt) $325 $406 $385 $60 $(21) Revenue $2,655 $3,174 $3,090 $435 $(84) Cost of goods sold $2,023 $2,300 $2,362 $339 $62 COGS % revenue 76.2% 72.5% 76.4% 0.2% pts. 3.9% pts. SG&A and R&D expenses $78 $78 $75 $(3) $(3) SG&A and R&D % revenue 2.9% 2.5% 2.4% (0.5)% pts. (0.1)% pts. Adjusted EBITDA $554 $796 $653 $99 $(143) Depreciation, depletion and amortization $179 $187 $194 $15 $7 Other expenses / (income), net $45 $31 $38 $(7) $7 Interest expense $26 $27 $26 $- $(1) Tax provision $107 $204 $126 $19 $(78) Operational tax rate 35.3% 37.1% 31.9% (3.4)% pts. (5.2)% pts. Adjusted net income $197 $347 $269 $72 $(78) Less: Net income attributable to noncontrolling interest $80 $152 $124 $44 $(28) Adjusted net income attributable to Alcoa Corporation $117 $195 $145 $28 $(50) Adjusted diluted earnings per share $0.63 $1.04 $0.77 $0.14 $(0.27) Diluted shares outstanding 186.3 188.0 188.5 2.2 0.5

Quarterly income statement excluding special items

Adjusted EBITDA excluding special items of $653 million

17

Three months ending March 31, 2018, excluding special items

1Q18 Financial summary

18 1. Intersegment eliminations included in Corporate inventory accounting. 2. Includes the Company’s proportionate share of earnings from equity investments in certain bauxite mines, hydroelectric generation facilities, and an aluminum smelter located in Brazil, Canada, and/or Guinea. 3. Amounts for Alumina and Aluminum represent the Company’s proportionate share of earnings from its equity investment in the Saudi Arabian joint venture. 4. Flat-rolled aluminum shipments, revenue, and adjusted EBITDA were 0.13 Mmt, $429M and $11M, respectively. 5. Third-party energy sales volume, revenue and adjusted EBITDA in Brazil were 885 GWh, $45M and $25M, respectively. $M Bauxite Alumina Aluminum4,5 Transformation Corporate inventory accounting Other corporate Total

Total revenue1 $296 $1,368 $2,115 $19 $(708)

• $3,090

Third-party revenue $47 $914 $2,111 $18

• $3,090

Adjusted EBITDA2 $110 $392 $153 $(2) $31 $(31) $653 Adjusted EBITDA margin % 37.2% 28.7% 7.2%

• 21.1%

Depreciation, depletion and amortization $29 $53 $106 $1

• $5

$194 Other expenses / (income), net3

• $1
• $37

$38 Interest expense $26 Provision for income taxes $126 Adjusted net income $269 Net income attributable to noncontrolling interest $124 Adjusted net income attributable to Alcoa Corp. $145

Adjusted EBITDA excluding special items sequential changes, $M

1Q18 Adjusted EBITDA drivers

19

36 61 78 (45) Energy (17) Raw Materials $653 1Q18 Other Volume (46) Currency (24) API (146) Metal Prices 4Q17 $796 Operational Impacts (40) Price / Mix

Segment Adj. EBITDA 4Q17 Metal Prices API Currency Volume Price/Mix Op. Impacts Energy Raw Materials Other Adj. EBITDA 1Q18 Bauxite $105

• (3)

(16) 3 (1) (1)

• 23

$110 Alumina $562

• (144)

(9) (22) 55 (22) (1) (14) (13) $392 Aluminum $246 64 (113) (12) (8) 3 (17) 38 (31) (17) $153 Segment Total $913 64 (257) (24) (46) 61 (40) 36 (45) (7) $655

Sequential adjusted EBITDA excl. special items change impacts by segment vs. 4Q17, $M

1Q18 Adjusted EBITDA drivers by segment

20 20

Segment and total adjusted EBITDA information

Adjusted EBITDA excluding special items breakdown

1. Includes intercompany eliminations, and impact from both LIFO and metal price lag.

Segment information, $M Total adjusted EBITDA information, $M

$246 $562 $105 $153 $392 $110

• 38%
• 30%

+5% Aluminum Alumina Bauxite 4Q17 1Q18 37.2% 28.7% 7.2% 2.9% pts.

• 8.3% pts.
• 4.3% pts.

1Q18 Segment Adj. EBITDA Margin % Change vs. 4Q17, Margin %

4Q17 1Q18 Change Segment total $913 $655 $(258) Transformation 10 (2) (12) Corporate inventory accounting1 (95) 31 126 Other corporate (32) (31) 1 Total adjusted EBITDA $796 $653 $(143)

21

Quarterly cash comparison and cash flows, $M Free cash flow and change in cash

Cash summary

1Q17 2Q17 3Q17 4Q17 1Q18 Cash provided from operations $74 $311 $384 $455 $55 Capital expenditures (71) (88) (96) (150) (74) Free cash flow $3 $223 $288 $305 $(19) 1Q17 2Q17 3Q17 4Q17 1Q18 Cash provided from operations $74 $311 $384 $455 $55 Cash used for financing (260) (78) (115) (53) (147) Cash provided from (used for) investing1 131 (87) (100) (170) (74) Effect of exchange rate changes on cash1 6 4 (4) 7 4 Net change in cash1 $(49) $150 $165 $239 $(162)

Quarter ending cash balance

22

1,196 1,358 1,119 954 804 853 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 +150 +165 +239 (162) (49)

1. On January 1, 2018, Alcoa adopted changes issued by the Financial Accounting Standards Board to the presentation of restricted cash in the statement of cash

• flows. For these three line items, there was no impact to the 1Q18 and 4Q17 amounts. The impact to these three line items for 1Q17, 2Q17, and 3Q17 was not
• material. As a result, the amounts reflected in the table for 1Q17, 2Q17, and 3Q17 are as previously reported.

Key financial metrics as of March 31, 2018

Balance sheet summary

23 1. $18M in return-seeking capital expenditures and $56M in sustaining capital expenditures 2. U.S. and Canadian salaried pension plans and U.S. salaried OPEB plan remeasured as of January 31, 2018 due to retirement benefit changes.

Cash

$1,196M

1Q18 Days working capital

18 Days

1Q18 Capital expenditures1 1Q18 Annualized return on capital Net debt-to-LTM adjusted EBITDA Pension & OPEB net liability2

$74M 8.4% 0.11x $3.3B

FY18 Key metrics

2018 Outlook

1. Information is as presented on April 18, 2018 and is not being updated as of the date of this presentation; includes1Q18 actual results; outlook for unpriced sales at $2,300 LME, $500 API, $0.21 Midwest premium and updated regional premiums and currencies. 2. AWAC portion of FY18 Outlook: ~55% of return-seeking capital expenditures, and ~60% of sustaining capital expenditures. 3. Environmental remediation reserve balance of $284M at March 31, 2018. Carrying value of ARO liability as of March 31, 2018 was $732M. 24

Total shipments

1Q18 Actual FY18 Outlook Bauxite (Mdmt) 11.5 47.5 – 48.5 Alumina (Mmt) 3.5 13.8 – 14.0 Aluminum (Mmt) 0.8 3.1 – 3.3

Cash flow impacts

1Q18 Actual FY18 Outlook Minimum required pension/OPEB funding $67M ~ $450M Additional pension funding – ~ $300M Return-seeking capital expenditures2 $18M ~ $150M Sustaining capital expenditures2 $56M ~ $300M DOJ / SEC (final payment January 2018) $74M $74M Environmental and ARO payments3 $25M $110M – $130M

Adjusted EBITDA excl. special items impacts

1Q18 Actual FY18 Outlook Adjusted EBITDA excl. special items $0.7B $3.5 – $3.7B1 Transformation EBITDA impacts $(2)M ~ $(30)M Corporate inventory EBITDA impacts $31M ~ $(60)M Other corporate EBITDA impacts $(31)M ~ $(140)M

Other income statement excl. special items impacts

1Q18 Actual FY18 Outlook Non-operating pension/OPEB expense $38M ~ $160M Depreciation, depletion and amortization $194M ~ $775M Interest expense $26M ~ $110M Operational tax rate 31.9% ~ 35% Net income of noncontrolling interest $124M 40% of AWAC NI

Bauxite

1Q18 Alcoa product shipments by segment, Mmt

Aluminum value chain

25

Bauxite Alumina Aluminum 3rd Party 11.5 91% 9% 3.5 3rd Party 32% 68% Alumina 3rd Party 100% Aluminum 0.8

Alcoa 1Q18 production cash costs

Alumina refining

Composition of alumina and aluminum production costs

Aluminum smelting

26 1. Australia is priced on a rolling 16 quarter average. Natural Gas Conversion 36% Fuel Oil 5% 13% Bauxite 31% 15% Caustic

Input Cost Inventory Flow Pricing Convention Estimated Annual Cost Sensitivity Caustic Soda 5 - 6 Months Quarterly $9M per $10/dmt Natural Gas1 N/A N/A N/A Fuel Oil 1 - 2 Months Prior Month $3M per $1/bbl

Conversion 15% Materials 6% Power 23% Carbon 14% Alumina 42%

Input Cost Inventory Flow Pricing Convention Estimated Annual Cost Sensitivity Alumina ~2 Months 30-day lag to API $43M per $10/mt Petroleum Coke 1 - 2 Months Spot, Quarterly & Semi-annual $7M per $10/mt Coal Tar Pitch 1 - 2 Months Spot, Quarterly & Semi-annual $1.5M per $10/mt

$M Segment LME + $100/mt API + $10/mt Midwest + $100/mt Europe + $100/mt Japan + $100/mt AUD + 0.01 USD/AUD BRL + 0.10 BRL/USD CAD + 0.01 CAD/USD EUR + 0.01 USD/EUR ISK + 10 ISK/USD NOK + 0.10 NOK/USD Bauxite (3) 4 Alumina 119 (16) 6 (1) Aluminum 203 (39) 106 102 24 (1) (3) 3 (4) 6 3 Total 203 80 106 102 24 (20) 7 3 (5) 6 3

Estimated annual EBITDA sensitivities

2018 Business information

27

Pricing conventions

Segment 3rd-Party Revenue Bauxite

• Negotiated prices

Alumina

• ~95% of third-party smelter-grade alumina priced on API/Spot
• API based on prior month average of spot prices

Aluminum

• LME + Regional Premium + Product Premium
• Primary aluminum 15-day lag; flat rolled aluminum 30-day lag
• Brazilian hydroelectric sales at market prices

Regional premiums Primary aluminum % of 2018 shipments Midwest ~45% Rotterdam Duty Paid ~45% CIF Japan ~10%

Regional premium breakdown

Pension and OPEB net liability and financial impacts Net liability as of March 31, 20181

Pension and OPEB summary

Estimated financial impacts, $M

28

OPEB Total $1.2B

ROW $0.3

Pension Total $2.1B

U.S. $1.2 U.S. $1.8

Pension funding status as of December 31, 2017  U.S. ERISA ~83%  GAAP Worldwide ~70% U.S. pension contributions currently not tax deductible

1. U.S. and Canadian salaried pension plans and U.S. OPEB plan remeasured as of January 31, 2018 due to plan changes. All other pension and OPEB valuations as of December 31, 2017. 2. Includes impacts from previously announced U.S. and Canadian pension and OPEB plan changes, and impact from annuitization of certain Canadian pension plan benefits.

Expense impact 2018 Segment pension ~85% Segment OPEB ~5% Corporate ~10% Total adj. EBITDA impact ~$65M Non-operating ~$160M Special items2 (curtailment/settlement) ~$152M Total expense impact ~$377M Cash flow impact 2018 Minimum required pension funding ~40% Additional pension funding ~40% OPEB payments ~20% Total cash impact ~$750M

Bauxite (3rd-party seaborne) Alumina (smelter grade) Aluminum (primary) 2018 Outlook Balanced Deficit Deficit 2018 Supply/Demand Balance, Mmt Global 1 to 6; stockpile growth

• 1.1 to -0.3; deficit
• 1.0 to -0.6; deficit

China

• 70 to -67; deficit
• 2.5 to -2.1; deficit

1.0 to 1.2; surplus World ex-China 68 to 73; surplus 1.4 to 1.8; surplus

• 2.0 to -1.8; deficit

2018 Notes Stockpile growth; Indonesia and Guinea supply growth Balances before Chinese alumina imports of 1.5 Mmt Demand growth, 2018 vs. 2017

• Global = 4.25 to 5.25%
• China = 5.75 to 6.25%
• World ex-China = 3.25 to 3.75%

Projected 2018 market balances

Market outlook

29 Source: Alcoa analysis, CRU, Wood Mackenzie, CM Group, IAI, CNIA, NBS, Aladdiny, Bloomberg. Pre-trade balances. Information is as presented on April 18, 2018 and is not being updated as of the date of this presentation.

Alcoa Corporation annual consolidated amounts Bauxite production, Mdmt

Production and capacity information

Alumina refining, kmt

30 1. The Company’s proportionate share of earnings from its equity investment in the Saudi Arabian joint venture does not impact adjusted EBITDA. 2. Restarting 161 kmt of curtailed capacity to be completed in the second quarter of 2018.

Aluminum smelting, kmt

Mine Country 2017 Production Darling Range Australia 33.2 Juruti Brazil 5.6 Poços de Caldas Brazil 0.2 Trombetas Brazil 2.7 Boké Guinea 3.2 Al Ba’itha1 Saudi Arabia 0.9 Total 45.8 Facility Country Capacity Curtailed Kwinana Australia 2,190

• Pinjarra

Australia 4,234

• Wagerup

Australia 2,555

• Poços de Caldas

Brazil 390 214 São Luís Brazil 1,890

• San Ciprián

Spain 1,500

• Point Comfort

U.S. 2,305 2,305 Total 15,064 2,519 Ras Al Khair1 Saudi Arabia 452

• Facility

Country Capacity Curtailed Portland Australia 197 30 São Luís Brazil 268 268 Baie Comeau Canada 280

• Bécancour

Canada 310 207 Deschambault Canada 260

• Fjarðaál

Iceland 344

• Lista

Norway 94

• Mosjøen

Norway 188

• Avilés

Spain 93 32 La Coruña Spain 87 24 San Ciprián Spain 228

• Intalco

U.S. 279 49 Massena West U.S. 130

• Warrick2

U.S. 269 269 Wenatchee U.S. 184 184 Total 3,211 1,063 Ras Al Khair1 Saudi Arabia 186

Appendix & Reconciliations

Investments summary

32 1. Alcoa Corporation has an investment in a joint venture related to the ownership and operation of an integrated aluminum complex (bauxite mine, alumina refinery, aluminum smelter, and rolling mill) in Saudi Arabia. The joint venture is owned 74.9% by the Saudi Arabian Mining Company (known as “Ma’aden”) and 25.1% by Alcoa Corporation.

2. Halco Mining, Inc. owns 100% of Boké Investment Company, which owns 51% of Compagnie des Bauxites de Guinée. 3. Pechiney Reynolds Quebec, Inc. owns a 50.1% interest in the Bécancour smelter in Quebec, Canada thereby entitling Alcoa Corporation to a 25.05% interest in the

• smelter. Through two wholly-owned Canadian subsidiaries, Alcoa Corporation also owns 49.9% of the Bécancour smelter.

4. Each of the investees either owns the facility listed or has an ownership interest in an entity that owns the facility listed. 5. A portion or all of each of these ownership interests are held by wholly-owned subsidiaries that are part of AWAC. Investee Country Nature of Investment4 Ownership Interest Carrying Value as of March 31, 2018 P&L Location

• f Equity

Earnings Ma’aden Aluminum Company1 Saudi Arabia Aluminum smelter 25.1% Ma’aden Bauxite and Alumina Company1 Saudi Arabia Bauxite mine and Alumina refinery 25.1%5 Ma’aden Rolling Company1 Saudi Arabia Aluminum rolling mill 25.1% Subtotal Ma’aden $885M Other Expenses / (Income) Halco Mining, Inc.2 Guinea Bauxite mine 45%5 Energetica Barra Grande S.A. Brazil Hydroelectric generation facility 42.18% Mineração Rio do Norte S.A. Brazil Bauxite mine 18.2%5 Pechiney Reynolds Quebec, Inc.3 Canada Aluminum smelter 50% Consorcio Serra do Facão Brazil Hydroelectric generation facility 34.97% Manicouagan Power Limited Partnership Canada Hydroelectric generation facility 40% Subtotal other $528M COGS Total investments $1,413M

Bauxite mines

33

1. This table shows only the AWAC and/or Alcoa Corporation share (proportion) of reserve and annual production tonnage. 2. Reserves are in place for all mines other than Juruti and Trombetas, where the ore is beneficiated and a wash recovery factor is applied. 3. This entity is part of the AWAC group of companies and is ultimately owned 60% by Alcoa Corporation and 40% by Alumina Limited. 4. Alumínio is ultimately owned 100% by Alcoa Corporation. 5. Brazilian mineral legislation does not establish the duration of mining concessions. The concession remains in force until the exhaustion of the deposit. The company estimates that (i) the concessions at Poços de Caldas will last at least until 2020, (ii) the concessions at Trombetas will last until 2046 and (iii) the concessions at Juruti will last until 2100. Depending, however, on actual and future needs, the rate at which the deposits are exploited and government approval is obtained, the concessions may be extended to (or expire at) a later (or an earlier) date. 6. Alumínio holds an 8.58% total interest, AWA Brasil holds a 4.62% total interest and AWA LLC holds a 5% total interest in MRN. MRN is jointly owned with affiliates of Rio Tinto Alcan Inc., Companhia Brasileira de Alumínio, Vale, South32, and Norsk Hydro. Alumínio, AWA Brasil, and AWA LLC purchase bauxite from MRN under long-term supply contracts. 7. AWA LLC owns a 45% interest in Halco (Mining), Inc. (“Halco”). Halco owns 100% of Boké Investment Company, a Delaware company, which owns 51% of CBG. The Guinean Government owns 49% of CBG, which has the exclusive right through 2038 to develop and mine bauxite in certain areas within an approximately 2,939 square-kilometer concession in northwestern Guinea. 8. AWA LLC and Alũmina Española, S.A. have bauxite purchase contracts with CBG that expire in 2033. Before that expiration date, AWA LLC and Alũmina Española, S.A expect to negotiate extensions of their contracts as CBG will have concession rights until 2038. The CBG concession can be renewed beyond 2038 by agreement of the Government of Guinea and CBG should more time be required to commercialize the remaining economic bauxite within the concession. 9. Guinea—Boké: CBG prices bauxite and plans the mine based on the bauxite content of total alumina (TAl2O3) and total silica (TSiO2). 10. Ma’aden Bauxite & Alumina Company is a joint venture owned by Saudi Arabian Mining Company (“Ma’aden”) (74.9%) and AWA Saudi Limited (25.1%). AWA Saudi Limited is part of the AWAC group of companies and is ultimately owned 60% by Alcoa Corporation and 40% by Alumina Limited. 11. Kingdom of Saudi Arabia—Al Ba’itha: Bauxite reserves and mine plans are based on the bauxite qualities of total available alumina (TA.Al2O3) and total silica (TSiO2). Country Project1 Owners’ Mining Rights (% Entitlement) Expiration Date of Mining Rights Probable Reserves2 (Mdmt) Proven Reserves2 (Mdmt) Available Alumina Content (%) AvAl2O3 Reactive Silica Content (%) RxSiO2 2017 Annual Production (Mdmt) Australia Darling Range Mines ML1SA Alcoa of Australia Limited (“AofA”)

3

(100%) 2024 109.2 70.0 32.8 1.0 33.2 Brazil Poços de Caldas Alcoa Alumínio S.A. (“Alumínio”)

4

(100%) 2020

5

0.2 1.5 39.3 4.6 0.2 Juruti

5 RN101, RN102,

RN103, RN104, #34 Alcoa World Alumina Brasil Ltda. (“AWA Brasil”)

3 (100%)

2100

5

22 3.8 46.6 4.4 5.6 Equity interests: Brazil Trombetas Mineração Rio do Norte S.A. (“MRN”)

6

(18.2%) 2046

5

2.7 6.1 49.0 5.1 2.7 Guinea Boké Compagnie des Bauxites de Guinée (“CBG”)

7 (22.95%)

2038

8

36.0 37.8 TAl2O3

9

48.8 TSiO2

9

1.7 3.2 Kingdom of Saudi Arabia Al Ba’itha Ma’aden Bauxite & Alumina Company (100%)

10

2037 33.8 18.1 TAA

11

49.4 TSiO2

11

8.7 0.9

Alumina refineries

34 1. Nameplate Capacity is an estimate based on design capacity and normal operating efficiencies and does not necessarily represent maximum possible production. 2. The figures in this column reflect Alcoa’s share of production from these facilities. For facilities wholly-owned by AWAC entities, Alcoa takes 100% of the production. 3. This entity is part of the AWAC group of companies and is ultimately owned 60% by Alcoa and 40% by Alumina Limited.

4. The operating capacity at this refinery is producing at an approximately 45% output level. 5. With respect to Rio Tinto Alcan Inc. and South32, the named company or an affiliate thereof holds the interest. 6. The Point Comfort alumina refinery is fully curtailed. 7. The Ras Al Khair facility is 100% owned by Ma’aden Bauxite & Alumina Company, a joint venture owned by Ma’aden (74.9%) and AWA Saudi Limited (25.1%). AWA Saudi Limited is part of the AWAC group of companies and is ultimately owned 60% by Alcoa and 40% by Alumina Limited. Country Facility Owners (% of Ownership) Nameplate Capacity1 (kmt / year) Alcoa Corporation Consolidated Capacity2 (kmt / year) Australia Kwinana Pinjarra Wagerup AofA

3 (100%)

AofA (100%) AofA (100%) 2,190 4,234 2,555 2,190 4,234 2,555 Brazil Poços de Caldas São Luís (“Alumar”) Alumínio (100%) AWA Brasil

3 (39%),

Rio Tinto Alcan Inc.

5 (10%)

Alumínio (15%) South32

5 (36%)

390

4

3,500 390 1,890 Spain San Ciprián Alúmina Española, S.A.

3 (100%)

1,500 1,500 United States Point Comfort, TX AWA LLC

3 (100%)

2,305

6

2,305 Total 16,674 15,064 Equity interests: Kingdom of Saudi Arabia Ras Al Khair Ma'aden Bauxite & Alumina Company (100%)7 1,800 452

Aluminum smelters

35 1. Nameplate Capacity is an estimate based on design capacity and normal operating efficiencies and does not necessarily represent maximum possible production. 2. The figures in this column reflect Alcoa’s share of production based on Nameplate Capacity from the smelter facilities. 3. The named company or an affiliate thereof holds this interest. 4. This figure includes the minority interest of Alumina Limited in the Portland facility, which is owned by AofA, an AWAC company. From this facility, AWAC takes 100% of the production allocated to AofA. 5. The Portland smelter has approximately 30,000 mtpy of idle capacity. 6. The Alumar smelter and casthouse have been fully curtailed since April 2015. 7. The Bécancour facility is owned by Alcoa (74.95%) and Rio Tinto Alcan Inc. (25.05%) through Rio Tinto Alcan Inc.’s interest in Pechiney Reynolds Québec, Inc., which is

• wned by Rio Tinto Alcan Inc. and Alcoa.

8. On January 11, 2018, a lockout of the bargained hourly employees commenced at the Bécancour smelter. As a result, only one of the three potlines is operating. 9. The Avilés and La Coruña smelters have approximately 56,000 mtpy of idle capacity combined. 10. The Intalco smelter has approximately 49,000 mtpy of idle capacity. 11. The Wenatchee smelter has been fully curtailed since the end of 2015. 12. In July 2017, the Company announced that it would restart three of five potlines at the Warrick smelter by the end of the second quarter of 2018. 13. The Ras Al Khair facility is 100% owned by Ma’aden Aluminum Company, a joint venture owned by Ma’aden (74.9%) and Alcoa Corporation (25.1%).

Country Facility Owners (% Of Ownership) Nameplate Capacity1 (kmt / year) Alcoa Corporation Consolidated Capacity2 (kmt / year)

Australia Portland AofA (55%), CITIC

3 (22.5%), Marubeni 3 (22.5%)

358 197

4,5

Brazil São Luís (“Alumar”) Alumínio (60%), South32

3 (40%)

447 268

6

Canada Baie Comeau, Québec Bécancour, Québec Deschambault, Québec Alcoa Corporation (100%) Alcoa Corporation (74.95%), Rio Tinto Alcan Inc.

7 (25.05%)

Alcoa Corporation (100%) 280 413 260 280 310

8

260 Iceland Fjarðaál Alcoa Corporation (100%) 344 344 Norway Lista Mosjøen Alcoa Corporation (100%) Alcoa Corporation (100%) 94 188 94 188 Spain Avilés La Coruña San Ciprián Alcoa Corporation (100%) Alcoa Corporation (100%) Alcoa Corporation (100%) 93 87 228 939 879 228 United States Massena West, NY Ferndale, WA (“Intalco”) Wenatchee, WA Evansville, IN (“Warrick”) Alcoa Corporation (100%) Alcoa Corporation (100%) Alcoa Corporation (100%) Alcoa Corporation (100%) 130 279 184 269 130 27910 18411 26912 Total 3,654 3,211 Equity Interests: Kingdom of Saudi Arabia Ras Al Khair Ma'aden Aluminum Company13 (100%) 740 186

4Q17 Adjusted EBITDA excluding special items comparison

Adjusted EBITDA structure and information

36 36 Adjusted EBITDA

• excl. special items, $M

Prior structure Bauxite $106 Alumina $562 Aluminum $234 Segment total $902 Transformation & legacy pension/OPEB $(4) Impact of LIFO and metal price lag $(51) Other corporate expense $(72) Alcoa Corporation Total $775 Adjusted EBITDA

• excl. special items, $M

New structure Bauxite $105 Alumina $562 Aluminum $246 Segment total $913 Transformation $10 Corporate inventory accounting $(95) Other corporate $(32) Alcoa Corporation Total $796 Notes ▪ Adjusted for pension/OPEB accounting change ▪ Adjusted for pension/OPEB accounting change ▪ Adjusted for pension/OPEB accounting change ▪ Adjusted for pension/OPEB accounting change ▪ Combined intercompany eliminations with impact

• f LIFO and metal price lag

▪ Adjusted for pension/OPEB accounting change; Reclassed intercompany eliminations

Adjusted EBITDA reconciliation

37

Alcoa Corporation’s definition of Adjusted EBITDA is net margin plus an add-back for depreciation, depletion, and amortization. Net margin is equivalent to Sales minus the following items: Cost of goods sold; Selling, general administrative, and other expenses; Research and development expenses; and Provision for depreciation, depletion, and amortization. Adjusted EBITDA is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because Adjusted EBITDA provides additional information with respect to Alcoa Corporation’s operating performance and the Company’s ability to meet its financial obligations. The Adjusted EBITDA presented may not be comparable to similarly titled measures of other companies.

$M 1Q17 4Q17 1Q18 LTM ending 3/31/18 Net income (loss) attributable to Alcoa Corporation $225 $(196) $150 $142 Add: Net income attributable to noncontrolling interest 83 140 124 383 Provision for income taxes 110 272 138 628 Other expenses / (income), net (79) 30 21 127 Interest expense 26 27 26 104 Restructuring and other charges 10 297 (19) 280 Depreciation, depletion and amortization 179 187 194 765 Adjusted EBITDA 554 757 634 2,429 Special items before tax and noncontrolling interest

• 39

19 107 Adjusted EBITDA excl. special items $554 $796 $653 $2,536

$M 1Q17 4Q17 1Q18 P&L classification Special items $(108) $391 $(5) Warrick restart costs

• 29

16 Cost of goods sold Rockdale inventory writedown

• 6
• Cost of goods sold

Becancour labor negotiation costs

• 3

2 Cost of goods sold Mark-to-market energy contracts 4 2 (17) Other expenses / (income), net Gain on asset sales (120) (2)

• Other expenses / (income), net

Restructuring-related items 9 290 (20) Restructuring and other charges Income tax items (1) 63 14 Tax provision

Special items detail, net of tax and noncontrolling interest

38

Free Cash Flow reconciliation

39 Free Cash Flow is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management reviews cash flows generated from operations after taking into consideration capital expenditures, which are both considered necessary to maintain and expand Alcoa Corporation’s asset base, and expected to generate future cash flows from operations. It is important to note that Free Cash Flow does not represent the residual cash flow available for discretionary expenditures since other non-discretionary expenditures, such as mandatory debt service requirements, are not deducted from the measure.

$M 1Q17 2Q17 3Q17 4Q17 1Q18 Cash from operations $74 $311 $384 $455 $55 Capital expenditures (71) (88) (96) (150) (74) Free cash flow $3 $223 $288 $305 $(19)

Net Debt reconciliation

40 Net debt is a non-GAAP financial measure. Management believes that this measure is meaningful to investors because management assesses Alcoa Corporation’s leverage position after considering available cash that could be used to repay outstanding debt.

$M 4Q17 1Q18 Short-term borrowings $8 $- Long-term debt due within one year 16 15 Long-term debt, less amount due within one year 1,388 1,445 Total debt 1,412 1,460 Less: Cash and cash equivalents 1,358 1,196 Net debt $54 $264

Days Working Capital

41 1. Days Working Capital = DWC working capital divided by (sales / number of days in the quarter).

$M 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Receivables from customers $668 $708 $789 $840 $811 $814 Add: Inventories 1,160 1,294 1,287 1,323 1,453 1,630 Less: Accounts payable, trade 1,455 1,434 1,508 1,618 1,898 1,813 DWC working capital $373 $568 $568 $545 $366 $631 Sales $2,537 $2,655 $2,859 $2,964 $3,174 $3,090 Number of days in the quarter 92 90 91 92 92 90 Days Working Capital1 14 19 18 17 11 18

Reconciliation and calculation information

Annualized Return on Capital (ROC)

42 1. Special items are before taxes and noncontrolling interest. 2. Denominator calculated using quarter ending balances. 3. Interest expense less interest income. 4. Fixed tax rate of 35%.

$M 1Q17 1Q18 Numerator: Net income attributable to Alcoa Corporation 225 150 Add: Net income attributable to noncontrolling interest 83 124 Add: Provision for income taxes 110 138 Profit before taxes (PBT) 418 412 Add: Interest expense 26 26 Less: Interest income 2 4 Add: Special items1 (114) (17) ROC earnings before taxes 328 417 ROC earnings before taxes multiplied by four2 1,312 1,668 ROC earnings after fixed tax rate of 35% 853 1,084 Denominator2: Total assets 17,076 17,096 Less: Cash, cash equivalents, restricted cash and short-term investments 824 1,204 Less: Current liabilities 2,623 2,976 Add: Long-term debt due within one year and short-term borrowings 23 15 Average capital base2 13,652 12,931 ROC 6.2% 8.4%

(PBT + net interest3 + special items) x 4 x (1 – fixed tax rate4) (Assets – cash – current liabilities + short term debt) ROC % = X 100 ($418 + $24 - $114) x 4) x (1 – 0.35) ($17,076 – $824 – $2,623 + $23) 1Q17 ROC % = X 100 = 6.2% ($412 + $22 - $17) x 4) x (1 – 0.35) ($17,096 – $1,204 – $2,976 + $15) 1Q18 ROC % = X 100 = 8.4%

Abbreviations listed in alphabetical order

Glossary of terms

43

Abbreviation Description % pts. Percentage points 1Q## Three months ending March 31 2Q## Three months ending June 30 3Q## Three months ending September 30 4Q## Three months ending December 31 Adj. Adjusted API Alumina Price Index Approx. Approximately ARO Asset retirement obligations AUD Australian dollar AWAC Alcoa World Alumina and Chemicals B Billion bbl Barrel BRL Brazilian real CAD Canadian dollar CIF Cost, insurance and freight COGS Cost of goods sold dmt Dry metric ton DOJ U.S. Department of Justice DWC Days working capital EBITDA Earnings before interest, taxes, depreciation and amortization ERISA Employee Retirement Income Security Act of 1974 EUR Euro

• ex. or excl.

Excluding FOB Free on board FY## Twelve months ending December 31 GAAP Accounting principles generally accepted in the United States of America GWh Gigawatt hour Abbreviation Description ISK Icelandic krona JV Joint venture kmt Thousand metric tons LIFO Last in first out method of inventory accounting LME London Metal Exchange LTM Last twelve months M Million Mdmt Million dry metric tons Mmt Million metric tons mt Metric ton Mmtpa Million metric tons per annum MWP Midwest premium N/A Not applicable NI Net income NOK Norwegian krone Op. Operational OPEB Other postretirement employee benefits P&L Profit and loss PBT Profit before taxes R&D Research and development ROC Return on capital ROW Rest of world SEC U.S. Securities and Exchange Commission SG&A Selling, general administrative and other U.S. United States of America USD United States dollar WA Western Australia YTD Year to date